Q&A: PepsiCo’s Chad Matthews On Contextualizing Pricing With Analytics
As the consumer goods industry bobs and weaves its way through an unprecedentedly challenging commerce landscape, more manufacturers are deepening their investments in data analytics and technology to optimize their pricing capabilities.
PepsiCo is one such example of a CPG that’s using these investments as a competitive advantage. It’s been just over a year since the food and beverage company brought its Pepviz data insights framework to retailers in a bid to partner and develop customized solutions; with inflation persisting and a recession looming, nothing about pricing has become simpler, but the company remains bullish on the tech’s potential to obtain a more granular view of consumer behavior in stores and online, including how shoppers perceive prices.
We checked in with Chad Matthews, chief commercial officer for PepsiCo Beverages North America, to learn more about how the company is leaning into analytics to steer through today’s pricing intricacies. Matthew leads the business’ enterprise customer development, commercialization, revenue growth management, allied partner development, national go-to-market, and industry relations.
You've been with the company for more than two decades. Have you ever dealt with a more complex pricing environment than today?
Today’s pricing environment is certainly dynamic, given the strong inflationary headwinds hitting all industries. But PepsiCo has been around since 1898, so we’ve experienced it all in our company’s history and believe we are well-positioned to adapt to external pressures. We're leaning into technology to more effectively operate in this environment, along with closely managing costs, and continuing to provide quality service to our retail partners.
How is PepsiCo leveraging analytics to optimize its pricing strategies during this inflationary environment?
Data and analytics are a major competitive edge for PepsiCo and enable us to provide an unmatched experience to our partners and in turn, consumers. Our proprietary data practice, Pepviz, brings together real-time data and analytics alongside industry expertise to provide our retail partners with actionable insights and data-driven solutions, to generate efficiencies and better navigate inflationary pressures.
This technology gives us a direct line of sight into the holistic shopping behavior of retail consumers across channels and has been a key contributor to our success in identifying consumer trends as it relates to inflation, among other factors, and determining how best to price and promote our products.
Are there any new data sources you're leveraging that you weren't a year or two ago?
We are constantly mining for new data sources to inform our decisions and are continuing to lean heavily into Pepviz and other digital technologies that help our company and our partners make better decisions and unlock granular growth opportunities. But “new data” is only part of it; the other part — equally if not more important — is how we integrate all of the disparate data we have to draw out really meaningful insights.
For example, we have built proprietary databases across individual households and stores which allows us to activate against growth opportunities under a highly granular and holistic approach.
Can you share details around some of the adjustments you've made as a result of these insights?
Through our Pepviz insights, we’ve found that shoppers perceive inflation amongst all food and beverage products to be twice as high as it actually is. In light of this, we’re helping our retail partners think through how to better shape value perceptions to meet the needs of their unique shoppers.
Particularly in an inflationary environment, we need to work even more closely with our partners to determine how we can best retain consumers and drive growth.
How do you measure consumer behavior changes when it comes to pricing?
We’re very closely tuned into consumer behaviors and their underlying attitudes, trying to gauge how perceptions of value impact purchase decisions across their overall baskets. For example, how do consumers view the intrinsic value of enjoying a bottle of Pepsi for $2 as compared to ordering an iced coffee drink at a coffee shop? And then as prices across our direct competitors and across potential substitute or adjacent categories change, how do we see shoppers’ trips and purchase frequency change in response?
There is a need to get very granular in this type of analysis, but at the same time, we try to contextualize our consumers’ behaviors within the broader pinches and tradeoffs they may be making in this macro environment.
When it comes to the impact of these changes, how have you adjusted your pricing strategies?
We have incredibly strong relationships with our retail partners and are constantly analyzing together how we can retain — and even expand — consumers in our categories. The key in this environment has been operating with granularity, offering greater value on the right products to the right consumers.
[See also: PepsiCo Cuts Through Healthy Snack Noise With Mobile Personalization]
Additionally, on the PepsiCo side, we’ve accelerated our cost-management initiatives leaning into our digital innovation and utilized mix and assortment solutions, as recently discussed in our quarterly earnings.
What are some of the KPIs you use to measure success?
At PepsiCo, we approach everything through the lens of our “Faster, Stronger, Better” objectives. We aim to be faster in our growth by winning in the marketplace through our consumer-centric approach and leading on innovation, stronger by transforming our capabilities, value chain and costs, and better by having a positive impact on our planet, our people, and communities.
We’ve found that in keeping these values at the forefront of what we do, we are able to drive success and deliver maximum impact to our partners, consumers, investors and other stakeholders.
How are you working with your bottlers and retail partners to ensure success?
We are committed to empowering our partners with the tools necessary to excel in any environment, and we’ve seen the impact that our insights have had on them. Our dedication to learning and building upon our knowledge of how, when, and where consumers are using our products has been instrumental to the success of our partners, and we look forward to continuing to provide them with the support needed to optimize that success.
